Enterprise software wars: 5 points of advice for CIOs

Enterprise software wars: 5 points of advice for CIOs

Summary: The consumerization of enterprise software has created confusion and opportunity for CIOs. This post offers context and advice.


The enterprise startup vision for tomorrow

The startups argue that lightweight, cloud-based tools, selected by end users rather than centralized IT departments, are the future of enterprise software.

This vision presents a future in which organizations buy software from a variety of vendors, each of which offers a specialized solution to a particular business problem. Because each solution is relatively small and focused, implementation times are short and pose less risk than traditional enterprise deployments.

In this scenario, enterprise buyers link these solutions together using pre-packaged, API-based, cloud-to-cloud integrations that are simpler to configure and cheaper to maintain than the customized integrations typical of on-premises software.

Indeed, lengthy and expensive implementations are a significant weak spot of traditional vendors and present serious problems for customers. Even my friend, Vinnie Mirchandani, a staunch enterprise guy if there ever was one, criticizes the established players for not listening to customers and doing a better job:

In the enterprise world, with dedicated account managers and teams, you would think the customer has much more access to vendor executives. The reality I suspect is there are many walls to break through and vendor executives are insulated from their customers.

In a talk before an audience in New York City, investor and (great) blogger, Fred Wilson, went even farther in his criticism of the incumbent vendors:

If I could short the entire big, fat, old, cynical, rip-off artist enterprise software business, I would. They're not innovating. There's nothing that those big companies do that's really any good. The caveat is it takes forever to rip out those systems.

Fred invests in startups that compete with the established vendors, so of course his comments are biased. However, despite the obvious hyperbole, he does speak some truth. When software vendors earn significant revenue from maintenance and support, rather than product sales, it's obvious that status quo, and not innovation, is the driving goal.

Although Fred is definitely correct that changing on-premises systems is hard, he does not mention that making business process changes with cloud-based software is almost as difficult. This is a critical point because process change issues, rather than technology, cause most enterprise software failures. In fairness, cloud projects tend to be smaller and more incremental, both of which lower project failure rates.

Next page:
Today's enterprise reality and 5 points of advice for CIOs

Topics: CXO, Enterprise Software, Start-Ups, NextGen CIO

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  • Ease of change is key...

    Great article! Among many good points, you say:

    '...making business process changes with cloud-based software is almost as difficult. This is a critical point because process change issues, rather than technology, cause most enterprise software failures.'

    Spot on! Too many systems - old and new - are too hard to make even simple process changes to. When choosing enterprise software customers unfortunately focus on the ability of the system to cope with their (existing) complex processes, and on the perceived flexibility to meet different scenarios.

    What they don't investigate properly is how easy is it, post-implementation, to switch from one process design to another? What happens when the organization restructures, or goes through M&A, or has to meet some new regulations?

    Enterprises need to look at TCO (total cost of change) if they're to choose software that will stay with them for years and not cost a fortune everytime something changes in the business. Because guess what - change happens!
    • Business process change is not a function of technology

      Technology, especially modern cloud software, is not usually the obstacle to change. The harder part is determining what the change should be and getting everyone on the same page. That part must come before making an technology changes.

      At some point, of course, you must change the workflow or process that is embedded in the software. Well-designed software makes that part easier than was possible in the past.
  • Agree on Ease of Change being very important

    Nice article, Michael. And it is so true about needing to be able to change the workflow and process in a software solution. Companies often think their processes contribute to their competitive advantage and so they want enterprise software to be customized to their specific needs. Yet, some beneficial workflow and process changes are not realized at the outset and only come to light after an implementation has begun, or after users are in full swing. Well-designed, flexible software can accommodate that.
    Molly Haskins